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SC 049 Tumbo Island v. Gulf Islands AA
TUMBO ISLAND INVESTMENTS LIMITED
v.
GULF ISLANDS ASSESSMENT DISTRICT
Supreme Court of British Columbia (No. 558/65)
Before: MR. JUSTICE JOHN S. AIKINS
Victoria, November 1 and 16, 1965
W.R. McIntyre for the Appellant
L.C. Dudley for the Respondent
Valuation - Farms - Forest Land - Stumpage Fees - Validity
The Board, in an appeal as to value of land classified as a farm, subtracted the stumpage value
of some standing timber which the Assessor had included.
HELD that the Board was right to do so. Because of the farm classification (not contested), one
should only value the land at its value for farming purposes, which does not include values for
logging purposes. Standing timber might have value related to farming purposes, such as in
supplying a cheap source of fencing, but that was not the basis of valuation in this case.
Reasons for Judgment (1)
The Assessment Appeal Board, at the instance of either the Provincial Assessor for Gulf Islands
Assessment District or of the Assessment Commissioner for the Province (the material does not
disclose which), has stated a case for the opinion of the Court pursuant to the provisions for
appeal by way of stated case on a point of law only set out in section 51 of the Assessment
Equalization Act, R.S.B.C. 1960, chapter 18.
In summary form the facts are as follows: The land in question is Lot 13, Plan 2423, on Tumbo
Island, in the Gulf of Georgia, Cowichan District. The respondent is the owner of Lot 13. Lot 13 is
classified as farm land in accordance with the definition of farm land given in section 2 of the
Taxation Act, R.S.B.C. 1960, chapter 376. The assessment of Lot 13 for 1965, excluding
improvements, was $26,686. Of this amount, $12,831 is attributed wholly to the value of standing
timber on the property. On appeal by the owner to the Court of Revision, that Court affirmed the
assessment. On further appeal to the Assessment Appeal Board, the owner was successful in
having the assessment reduced by the amount of the value attributed by the Assessor to the
standing timber on the property. The assessment was accordingly reduced by $12,831.
The ratio of the Board's decision is stated in paragraph 5 of the case, which is as follows:
5. The Board held that the timber upon the land could not be a factor in assessing the
value thereof for taxation purposes in the following words:
"However, the clear evidence (Exhibit 4) indicates that timber has been assessed
at $12,831. In the opinion of the Board this contravenes section 37 (6) (d) of the
Assessment Equalization Act with respect to assessment of farm land. Since this
lot must be assessed as farm land under the mandatory provisions of the Act the
Board is unable to find any reason for sustaining the timber assessment on this
lot."
Paragraph 6 of the case reads:
6. At the hearing aforesaid there was no evidence to indicate whether or not there was
any farming activity on the land and there was no evidence of the general practice in
assessing lands classified as farm lands within the Province of British Columbia with or
without standing timber situate thereon.
As to the first part of paragraph 6, in which the Board states that there was no evidence to
indicate whether there was any farming activity on the land, in my opinion the lack of any such
evidence is not of material significance because the classification of the land as farm land was
not in question. As to the latter part of paragraph 6, the lack of evidence as to any general
practice in assessing lands classified as farm lands with or without standing timber thereon
seems to me irrelevant to the question of law involved because a practice or practices followed in
assessing farm land does not assist in determining a question of law only.
The questions upon which the opinion of the Court is sought are these:
"1. Was the Board correct in law in holding that land classified as farm land should be
valued for assessment for farm purposes only and without reference to the value of
timber situate upon the land?
"2. Was the Board correct in law in holding 'since this lot must be assessed as farm land
under the mandatory provisions of the Act, the Board is unable to find any reason for
sustaining the timber assessment on this lot'?
"3. Was the Board correct in law in drawing on its general knowledge and past experience
to state: 'In general, timber is not assessed on farm lands at a separate value'?"
The relevant statutory provisions are section 37 (1) and section 37 (6) (d) of the Assessment
Equalization Act. Section 37 (1) reads:
37. (1) The Assessor shall determine the actual value of land and improvements. In
determining the actual value, the Assessor may give consideration to present use,
location, original cost, cost of replacement, revenue or rental value, and the price that
such land and improvements might reasonably be expected to bring if offered for sale in
the open market by a solvent owner, and any other circumstances affecting the value;
and without limiting the application of the foregoing considerations, where any industry,
commercial undertaking, public utility enterprise, or other operation is carried on, the land
and improvements so used shall be valued as the property of a going concern.
Section 37 (6) (d) is as follows:
(6) Notwithstanding the provisions of this section, . . .
(d) lands classified as "farm land" in a municipal corporation or rural area shall, while so
classified, be assessed at the value which the same have for such purposes without
regard to their value for any other purpose or purposes, but the assessed value of
improvements on farm land shall be determined under subsection (3).
I now summarize the argument for the appellant. It is contended that section 37 (6) (d) is an
imperative direction to Assessors and compels them to assess land classified as farm land at the
value which the land has for farming purposes only, without having regard to value for any other
purpose or purposes. This contention is undoubtedly correct. It is then argued that the statutory
provision cannot be properly construed as a direction to Assessors assessing farm land with
standing timber to wholly exclude standing timber from consideration as an element of value,
either enhancing or detracting from the value of the land, but that on a proper construction the
statutory provision does no more than preclude Assessors from treating standing timber on farm
land as either increasing or decreasing the value of the land for any purpose other than a farming
purpose.
Counsel for the appellant submits that if land classified as farm land carries a stand of growing
timber, then that fact may, paraphrasing section 37 (1), be "another circumstance affecting value"
which the Assessor may properly take into account in determining actual value, subject to the
qualification that the Assessor is precluded by section 37 (6) (d) from attributing any value to such
timber except in so far as the timber enhances the value of the land for a farming purpose or
farming purposes. Generally timber is considered as having value not for a farming purpose, but
for commercial purposes, that is, logging the timber and using the timber so logged for the
manufacture of lumber or for the manufacture of paper. However, counsel for the appellant points
out, and in my view rightly, that a stand of timber on farm land may well have value for farm
purposes, such as providing a readily available and inexpensive supply of timber for fence-posts
or fence-rails, furnishing a windbreak or shelter for cattle, or, one might add, as having value for
farm purposes in preventing soil erosion. On the other hand, counsel points out that standing
timber on farm land may detract from the value of the land for farming purposes because it may
be necessary for the owner at expense to clear some or all of the timber so that the land may be
cultivated. The presence of standing timber on farm land may, on the one hand, enhance the
value of the land for farming purposes or, on the other hand, may detract from the value of the
land for farming purposes.
The argument continues in this form. The Board's conclusion (stated in paragraph 5 of the stated
case) in holding that the "timber upon the land could not be a factor in assessing the value
thereof for taxation purposes" is wrong in law because the Board's conclusion as stated in terms
admits of no exception and, as a matter of law, the presence of standing timber on farm land may
be a circumstance which adds to or detracts from the value of the land for farm purposes.
Whether, in any particular instance, standing timber on farm land increases or decreases the
value of the land for farming purposes is a question of fact. On this basis it is submitted that
Question No. 1 should be answered in the negative.
I now turn to Question No. 1: The Board was right, in my opinion, in holding that "land classified
as farm land should be valued for assessment for farm purposes only." Taken thus far there is no
error. The Board has, however, added a qualification in the question by adding these words,
"without reference to the value of the timber situate upon the land."
Looking at the first question by itself, without reference to paragraph 5 of the stated case, I would
have no hesitation in saying, predicated upon construing the question as meaning that the Board
held that farm land is to be assessed without reference to the value of timber thereon for any
purposes (which would, of course, include farming purposes), that that question must be
answered in the negative. To say in absolute terms that no consideration may be given to the
value of timber on farm land is, in my view, to err in law. Whether a stand of timber on farm land
increases or decreases the value of the land for farming purposes is a question of fact which an
assessor as a matter of law may properly consider, although an assessor, in assessing farm land,
may not, in my opinion, take into account the value of standing timber thereon for any purpose
other than a farming purpose.
On looking at paragraph 5 of the stated case, I am left in some doubt as to whether the Board in
fact made such an unqualified pronouncement as that indicated in the first question. I note that in
paragraph 5 of the stated case the Board says that it held "that the timber upon the land could not
be a factor in assessing the value thereof for taxation purposes." Up to this point the view taken
by the Board would appear to be that timber is to be wholly ignored in assessing farm land.
However, the Board in the stated case and in the reasons which it gave for the conclusion which
it reached, goes on to mention Exhibit 4 and to state that, in the opinion of the Board, the
valuation or assessment of $12,831 for timber set out in Exhibit 4 contravenes section 37 (6) (d)
of the Act with respect to assessment of farm land. This leads me to the conclusion that what the
Board may have had in mind was that the assessment on the evidence before the Board was
made contrary to the provisions of section 37 (6) (d) because it was based on valuing the timber
on the farm land in question for a purpose other than a farming purpose, and hence the Board
was of the opinion that such valuation could not "be a factor in assessing the value" of the land.
During the course of the hearing the question arose as to whether I could and, if I could, for what
purposes I might look at the transcript of evidence given before the Board and filed pursuant to
the statutory direction contained in section 51 (5) of the Act. I was referred to Crown Zellerbach
Canada Limited and Crown Zellerbach Building Materials Limited v. Assessment Districts of
Comox, Cowichan, and Nanaimo. The reasons for judgment of the Court of Appeal are reported
at page 166 of the British Columbia Stated Cases dealing with the Assessment Equalization Act.
On the question of what use may be made of the transcript of evidence, I was referred to the
reasons for judgment of Mr. Justice Davey at page 173. I cite His Lordship's judgment at that
page and going on to page 174:It is desirable at this stage to determine what use may be made of the evidence the Board
is required to return with a stated case. The questions raised must be of law only, and the
facts found by the Board ought to be stated in the case; see cases cited on the form of a
stated case by Masten, J.A., in Re City of Hamilton and Birge (1924) 55 O.L.R. 448 at
page 451. In my opinion section 51 (5) of the Assessment Equalization Act does not
require a transcript of all the evidence to be filed, but only that part of the evidence
"dealing with the question of law raised in the appeal." Where the question of law is
whether there is any evidence to support a primary finding of fact, the purpose of the
transcript is obvious, but it is not so apparent where the question of law assumes other
forms and must be decided on the facts found by the Board. But since the Act requires a
transcript of the evidence dealing with the question of law to be filed, it must be for some
purpose, and the only one that I can see, keeping in mind that the Court has no
jurisdiction to find facts, is that the transcript may be examined to interpret and explain
the statement of facts contained in and the questions of !aw raised by the stated case.
However, I do not find that explanation entirely satisfactory, for surely if any doubt should
arise about the meaning of the stated case, it ought to be sent back to the Board for
clarification. But on occasion that may not be done, as it was not done here, and resort to
the transcript for explanation of interpretation may be helpful. Unsatisfactory as that
interpretation of section 51 (5) may be, it seems to be the only one that is tenable, and I
propose to act upon it and refer to the transcript to interpret and explain the stated case,
but not for the purpose of making findings of fact.
I now leave Question No. 1 temporarily to go on to a consideration of the second question. I do so
because, in my opinion, the stated case must be sent back to the Board for amendment as to this
question. I quote Question No. 2 again:
"2. Was the Board correct in law in holding 'since this lot must be assessed as farm land
under the mandatory provisions of the Act, the Board is unable to find any reason for
sustaining the timber assessment on this lot'?"
The difficulty I find with Question No. 2 is simply this: the Board has asserted in the question and
states in paragraph 5 of the case that it was unable to find any "reason" for sustaining the timber
assessment on the lot. My difficulty arises largely because of the use of the word "reason." I am
not at all clear whether the Board, when it said that it was unable to find any "reason," meant that
there was no evidence to support the assessment (which would raise a question of law), or
whether the Board meant that the evidence advanced to support the assessment was wholly
directed toward establishing that the timber had the value asserted for a purpose other than a
farming purpose, and that hence, in view of section 37 (6) (d), there was no proper reason in law
to support the assessment, the valuation of the timber being based on its use for a purpose other
than farming. Exhibit 4, which is referred to in paragraph 5 of the case, does not assist because it
does not state the factors taken into account in reaching the timber value of $12,831. In order to
find out how that valuation was worked out. I would have to make some sort of an analysis of the
evidence given before the Board. I could attempt this task with a view to interpreting and trying to
find the proper explanation of the case as stated and of the second question raised. However, in
view of what was said by Mr. Justice Davey in the Crown Zellerbach Canada Limited case, supra,
because I entertain doubt as to the meaning of the question and the meaning of the case, I think
the proper course is to send the case back to the Board for amendment. I do not think I should in
any way attempt to fetter the Board by making any directions as to what amendments should be
made, but I may, I think, properly say that there should be clarification of what the Board meant
when it said that it was unable to find any reason for sustaining the timber assessment on Lot 13,
and if the Board was satisfied as to how the Assessor arrived at his valuation of the timber in
question-that is, as to whether the timber was valued for farming purposes or for purposes wholly
other than farming, or a mixture of the two-a statement of the facts found would be of assistance.
I now revert to the first question. On looking at the reasons given by the Board for allowing the
appeal, I can see no finding in terms corresponding with what the Board says that it held in the
opening part of paragraph 5 of the case. On further consideration of paragraph 5 of the case, I
am left in some doubt as to whether the Board is to be taken to have stated a principle of general
application to all farm land or whether what the Board meant was that the timber on the particular
land, the subject-matter of the appeal, could not be a factor in assessing the value of the land
because, as stated in the latter part of paragraph 5, the Board found that the valuation of the
timber contravened the provisions of section 37 (6) (d). If the latter is the correct interpretation of
what the Board held, then the Board's conclusion was not based on a principle of general
application that in no case could timber be a factor in assessing the value of farm land, but was
founded on the narrow ground that, in the case of the particular land in question, the valuation of
the timber could not be taken into account because it had been valued by the Assessor in some
way which contravened section 37 (6) (d). If one has regard to the first question isolated from the
rest of the stated case, it is perfectly clear, but on reading the first question with paragraph 5 of
the stated case, together with the reasons given by the Board for allowing the appeal, I find that I
am left in some doubt as to whether the first question accurately reflects the conclusion reached
by the Board. It seems to me that I must look at the first question in conjunction with the rest of
the stated case and not simply consider it in isolation, and on doing so I find that I am in some
doubt about the meaning of the case. Because I have some doubt as to the meaning of the case,
I have reached the conclusion that the case must be sent back to the Board for amendment as to
the first question, as well as being sent back for amendment as to the second question.
I now proceed to consider the third question. The sense of the question seems to me to be this:
may the Board use its knowledge and past experience in assessment matters in determining a
question of law-namely, whether in assessing farm land the Assessor may value the timber
separately and add it in to make the over-all assessed value? The question must be answered in
the negative. It must be so answered because I am unable to see how the Board's experience in
assessment cases, great as it is, or knowledge of assessment practice, can have any bearing on
the question posed. What Assessors have done or have not done about timber on farm land is
not determinative of what as a matter of law should be done. To say, in a case such as this in
which the Assessor apparently valued the land and valued the timber and added the two together
to reach the assessed value, that the Assessor erred in law because other Assessors do not do it
in the same way simply avoids the question, which must be decided on its own merits. I would,
therefore, answer the third question in the negative. There is no need to ask the Board to amend
the case as to the third question.
For these reasons, pursuant to section 51 (6) of the Assessment Equalization Act, I direct that the
stated case be sent back to the Board for amendment.
It is unnecessary to make any direction as to costs at this stage.
Reasons for Judgment (2)
This appeal came on for hearing before me at Victoria on the 1st of November of this year. I gave
written reasons for judgment on November 4th directing that the stated case submitted by the
Assessment Appeal Board be sent back to the Board for amendment as to Questions Nos. 1 and
2. By my reasons for judgment I disposed of the third and last question upon which the opinion of
this Court was sought.
The Assessment Appeal Board has now submitted an amended case, and the first two questions,
as amended, are as follows:"1. Was the Board correct in law in holding that land classified as farm land should be
valued for assessment for farm purposes only and without reference to the value of the
timber situate upon the land for logging purposes?
"2. Was the Board correct in law in holding that the value of timber for logging purposes
cannot be assessed separately and added to the value of the land as farm land?"
These reasons are written as supplementary to my reasons for judgment dated November 4th,
and the latter must be read before reading what follows because I have not, for the sake of
brevity, repeated the essential facts necessary to an understanding of this appeal or the relevant
statutory provisions, nor have I restated the arguments submitted to me initially or the conclusions
reached thereon which are pertinent to the final disposition of this appeal.
Both Questions Nos. 1 and 2 of the case as amended must be answered in the affirmative.
Although I think my reasons of November 4th will make it reasonably clear why I am of the
opinion that both questions must be answered in the affirmative, I think it advisable nevertheless
to amplify the reasons already given and to consider certain arguments put to me on the further
hearing of this appeal.
I wish to make it clear that in answering Questions Nos. 1 and 2 in the affirmative I do so only on
the basis of the facts set out in the case stated by the Board. On the case stated by the Board,
two considerations emerge as having governing importance. These are:(1) The timber on the land in question was assessed separately and wholly at its value for
logging purposes; that is, at its stumpage value in 1964 if sold to a logger or mill.
(2) There was no evidence before the Board of any actual farming being carried out on
the land in question or, and I here quote from paragraph 6 of the stated case, "of the
extent to which the value of the farm land may have been enhanced by the presence of
the timber." I think the sense of the case requires that the latter finding be construed in
this way: that there was no evidence of the extent to which the value of the land as farm
land may have been enhanced by the presence of timber; that is, as to whether or not the
timber affected the value of the land for any farming purpose.
I have therefore concluded that the Board was correct in reducing the assessment of the land by
the amount of value attributed to the timber because the timber was valued wholly for logging
purposes without any relationship whatsoever to farming purposes. The Assessor in valuing the
timber for a purpose other than farming made the assessment contrary to the restrictions set out
in section 37 (6) (d) of the Assessment Equalization Act, which I have quoted in full in my reasons
of November 4th.
Counsel for the appellant expressed concern that if Questions Nos. 1 and 2 were answered in the
affirmative, that such a decision might constitute authority for the proposition that under no
circumstances could the stumpage value of timber on farm land be considered as a factor in
determining the actual value of farm land as required by section 37 (1) of the Act. My having
answered Questions Nos. 1 and 2 in the present appeal in the affirmative is not to be taken as
approving any principle that the value of timber on a stumpage basis-that is, on the basis of what
could be obtained for it if sold to a logger on mill - cannot under any circumstances be a factor
entering into the determination of the actual value of farm land. It seems to me that the amount of
money that might be obtained from a stand of timber on farm land if sold to a logger might well be
taken into account in valuing farm land for farm purposes if the removal of the timber could be
related to a farming purpose. This can perhaps best be put by way of an illustration discussed
during argument. Suppose the case of a farm consisting in part of 10 acres of merchantable
timber. The 10-acre tract is suitable for farming purposes if cleared. It seems to me that such a
10-acre tract may well be more valuable as farm land for farming purposes than, say, 10 acres of
scrub timber with no merchantable value at all because the owner could clear the former for farm
purposes and could hope to recover part of his cost of clearing, getting the stumps out, and
preparing the land for ,cultivation or for pasture by selling the merchantable timber. It is
unnecessary for me to decide whether, in the illustration given, the stumpage value of timber if
sold might properly be taken into account in determining the actual value of farm land for farm
purposes only, and I give the illustration simply to make it abundantly clear that in affirmatively
answering Questions Nos. 1 and 2, which are put in broad terms, I should not be taken as having
held that under no circumstances whatsoever may the commercial value of timber be taken into
account in determining the actual value for farm purposes only of land classified as farm land.
Suffice it to say that on the facts of the present appeal in which the assessment in question is
made up in part of the valuation of timber for a commercial purpose with no relation whatever to
any farming purpose the assessment in so far as the timber is concerned contravenes section 37
(6) (d) of the Assessment Equalization Act.
Certain further arguments advanced by counsel for the appellant require consideration. Firstly, it
is contended that on the hearing before the Assessment Appeal Board the burden of proof to
show that the assessment was wrong rested upon the owner, who was the appellant before the
Board, and that in absence of any evidence to show what the proper valuation of the timber
should have been for farm purposes, the Board should have allowed the assessment to stand.
The answer to this contention I think to be this. On the findings of fact set out in the stated case it
is apparent that the Assessor valued the timber in contravention of the prohibition contained in
section 37 (6) (d) of the Act. On all the evidence before the Board (regardless of whether given
for the owner or for the Assessor) it was established that the part of the whole assessment
attributable to the timber could not, as a matter of law, be sustained. Once the necessary facts
were established before the Board to show that the Assessor had proceeded in contravention of
section 37 (6) (d) in valuing the timber and adding it to the value of the land in order to arrive at
the assessment, the Board, in my opinion, was bound to reduce the assessment by the amount of
the improper valuation put upon the timber. In my opinion the rule as to burden of proof does not
go so far as to require that the owner-appellant establish what value should have been placed on
the timber by the Assessor if he had proceeded in accordance with the restrictions imposed by
section 37 (6) (d) or that on the proper application of section 37 (6) (d) the timber had no value at
all before the Assessment Appeal Board could properly reduce the total assessment by the
amount attributable to the timber valued by the Assessor for a purpose other than a farming
purpose in contravention of section 37 (6) (d).
It is contended, secondly, that the Board in wholly eliminating the timber as contributing any value
to the land proceeded on a wrong principle because in arriving at an assessment all factors or
circumstances affecting value must be taken into consideration-Assessment Equalization Act,
section 37 (1). The sense of this submission, as I understood it, is that even if the Board was right
in reducing the assessment by the amount thereof attributable to the timber because that amount
was determined by the Assessor contrary to the provisions of section 37 (6) (d) the Board should
nevertheless have attributed some value to the timber for a farming purpose in compliance with
section 37 (6) (d). As to this submission, it is sufficient to say that in my opinion neither of the two
questions to be answered raises this issue.
The final point argued by counsel for the appellant was that the Board, by reducing the total
assessment by the amount thereof attributable to timber, has in effect held that timber on farm
land is not assessable-that is, that it is not a factor or circumstance to be taken into account in
assessing farm land-and that such a decision is beyond the power of the Board on the authority
of Toronto v. Olympia Edward Recreation Co. Ltd. (1955) 3 D.L.R. 641, (1955) S.C.R. 454. The
submission in brief is that an assessment appeal tribunal is without authority of any kind to
determine a question of legal liability to assessment. I do not, however, think it necessary to
follow this line or argument further because in my view the stated case does not involve any
finding by the Board that timber may not be valued as an element going to make up the actual
value of farm land, but involves nothing more than the conclusion that, in the case of farm land,
timber may not be treated as an element of value on the basis of its value for a purpose other
than a farming purpose in conformity with the statutory restrictions on valuing farm land contained
in section 37 (6) (d) of the Act.
For these reasons I have answered Questions Nos. 1 and 2 in the affirmative. The respondent is
entitled to costs to be taxed.